The Influence Of Government Subsidy On Enterprise's Capital Misallocation

China's economy has entered a period of new normal,and the economic growth has gradually been declined,along with the disappearing of the demographic dividend.Adjusting the economic structure and upgrading industry structure is the first priority to the reform of the economic system.Many studies show that the resource misallocation is the important factors of China's economic growth and enterprises output efficiency.Optimizing resource allocation and improving its efficiency is an important way to deepen the reform.Therefore,studying the efficiency of resource allocation problems and the deep-seated reasons for resource misallocation,is necessary to understand the process of economic development.This paper focuses on capital misallocation problem.As far as we are concerned,policy intervention is a very important cause of enterprise capital misallocation,and government subsidy is one of the most important economic means of policy intervention.Government subsidy has directly led to the lower efficiency of capital allocation.The existing literature study shows that the influence of government subsidies is related to corporate ownership,and the effect of government subsidy varies in different industries.Studying further on the policy intervention,especially on the influence of government subsidies to enterprises of different ownership and different industries,and understanding the profound cause of capital misallocation,is the major task in this paper.This paper firstly summarizes the definition of capital misallocation,then analyzes the system background of government subsidy and the influence of government subsidy on enterprises' capital misallocation.Lastly,this paper uses 2003-2015 panel data of non-financial listed companies in China to study the enterprises' capital misallocation of different ownership and different industries affected by government subsidy.The conclusion of empirical analysis is as follows:(a)the influence of government subsidies on the enterprises' capital misallocation is nonlinear.(b)the influence of government subsidies on the enterprises' capital misallocation of different ownership varies,and so it does on the different industry.According to our empirical result,we put forward some suggestions.